IR Insider is a production of NYU's International Relations Society. Our goal is to explain and discuss issues in IR in an engaging and thought-provoking fashion. We are written by students, for students, about issues students care about.

The Restaurants that Don’t Exist on the Streets

You have probably heard the names Ando, Green Tiffin, and Sprig, but may never have seen any of them on the street. These are three of the most popular virtual restaurants in the U.S — restaurants which you can only find online.

Virtual restaurants exist in industrial parks, commissary kitchens, and basements in cities like New York and Chicago, but there is neither a formal dining room nor wait staff to assist you. These restaurants take orders only by phone or through apps like GrubHub or Postmate.

Without the high overhead and start-up costs incurred by “real” restaurants, virtual restaurants are more likely to survive in the competitive market. Studies have shown that in cities like New York and Silicon Valley, surging real estate prices have made it almost impossible for small restaurants to function.

GrubHub is the largest food-delivery app in the state (Credit: GrubHub)

The survival of virtual restaurants largely relies on the consolidated kitchen, which usually contains up to 10 different restaurants. This structure considerably cuts down cost and increases efficiency. Each staff is assigned to a specific set of tasks to maximize efficiency.

The rise of virtual restaurants is also a sign of Americans’ increasing laziness. According to US Census Data, Americans spent more on diners than on groceries for the first time in 2016.

Different from a traditional restaurant, the number of orders for a virtual restaurant depends heavily on to what extent the delivery partner promotes it. For instance, on GrubHub, the higher commission you pay, the more prominent your restaurant is placed in GrubHub’s listings.

People are now used to ordering online, whether for books, apparel, or food. Waiting for your food at home seems much better than standing in the 2-hour lane for a popular diner. The trend of virtual restaurants is real, and traditional restaurants must adjust themselves to adapt to the trend.